‘Growing appetite’ for assets continues in Asia

Despite the slowdown of spirits in the Chinese market, there is a “growing appetite for assets” among Asian spirits companies, says a recent report.

Rabobank claims there is a “growing appetite” for spirits assets in Asia, making a more “aggressive” marketplace

In its Spirits Quarterly report for 2014, Rabobank claimed that despite a continued downturn of spirits sales in China – a result of its government’s ongoing clampdown on extravagant spending – a number of large acquisitions made by Asian drinks groups means that the region still holds strong prospects.

In January this year, Japan’s Suntory Holding’s announced its acquisition of Maker’s Mark producer Beam Inc, while Emperador won its bid to acquire Scotch whisky firm Whyte & Mackay.

“Taken together, the recent Suntory and Emperador acquisitions signal a growing appetite for assets among Asian players,” said Rabobank analyst Stephen Rannekleiv.

“For those looking to sell spirits brands, this opens up important opportunities that could drive improved pricing for assets. For those looking to make acquisitions, it is clear that the bidding process is becoming more competitive and aggressive.”

Rabobank analysts said that despite positive performance in the wider Asia region, it was unlikely that there would be any improvement in sales of both domestic and international spirits in China over the next six months.

Analysts further predicted that the country’s premium spirits market would not return to growth until late Q1 2015.

Elsewhere, Rabobank noted that in the US, spirits consumption had continued to grow, but that growth was slowing.

In Europe, analysts said that sales remained “soft”, though there were signs of stabilisation in some markets.

In India, the mass spirits market was hit by government instigated tax hikes, however the premium spirits sector continued to show “impressive growth”.

Meanwhile, Brazil’s consumption challenges have been bucked by international premium spirits, which generated double digit growth in 2013 and set to benefit further from the upcoming FIFA World Cup.